GM Boss Akerson Says Company Will Keep Opel Unit

By Christoph Rauwald

Getty Images

General Motors CEO Dan Akerson.

FRANKFURT—General Motors Co. Chief Executive Dan Akerson assured staff at its unprofitable European Adam Opel unit that the brand is an integral part of GM’s global operations and rejected calls for a sale, adding an alliance with PSA Peugeot-Citroën SA will lead to the economies of scale Opel has so far lacked in Europe.

“Our protracted losses have even prompted some analysts to argue that we should sell Opel or simply close up shop and leave car sales in the region to others. I’m not about to do that,” Mr. Akerson told staff at Opel’s headquarters outside Frankfurt.

“Recommendations that we ‘cut and run’ show you that some people simply do not see how important Opel is to our success,” he said.

GM’s European division is set to lose between $1.5 billion and $1.8 billion this year depending on the level of restructuring in the fourth quarter. Last year it lost $747 million. The region isn’t expected to return to break-even on an operating basis until the middle of the decade.

New-car sales in Europe have been shrinking for almost five years amid high unemployment and tough austerity measures in many countries to tackle bloated sovereign debt. Declining demand and chronic overcapacity are causing steep losses in the European mass-market segment, which is forcing car companies to cut thousands of jobs and consider costly plant closures.

GM will cut 2,600 jobs in Europe this year and reduce fixed costs by $300 million. It wants to lower costs by another $500 million between 2013 and 2015 and will continue to reduce head count as well. Opel employed around 40,000 staff across Europe at the end of last year, with Germany accounting for 22,000 staff.

“Like most auto companies, we expect that the weakness in Europe will continue to impact our business and the industry for the next several years,” Mr. Akerson said. “But unlike some forecasts, ours is built around conservative volume and revenue assumptions.

“In other words, we’re counting on our own hard work—not an economic recovery—to drive the business forward,” he said.

GM forged an alliance with France’s Peugeot in February to share costs in the fields of vehicle development, purchasing, logistics and potentially other areas as well. However, several media reports published over the last days suggest cooperation talks have come to a grinding halt or collapsed altogether.